Question

Suppose ASU decides to sell tickets to its three 2020 football home games. Market research suggests differing demand schedules for younger fans (ages 21 and under) and older fans (ages 22 and up). The demand schedules are shown below.

Sun Devil Stadium has a capacity of 53,599.

Age 21 and under

Price Quantity

$100 4,000

$80. 4,500

$60. 6,500

$40. 7,500

$20. 8,500

Age 22 and up

Price Quantity

$150. 15,000

$120. 20,000

$100. 25,000

$80 35,000

$60 45,000

$40 60,000

$20 75,000

A. Show the overall demand schedule for ASU games. Show your work.

Price                                          Quantity Demanded

B. If ASU set one price for all fans, what price would it charge and how many tickets would it sell per game? Show your work

C. Calculate the consumer surplus at the price determined in part b. Show your work.

D. (2 pts) If ASU were to charge a different price for younger fans than it charged for older fans, what prices would they charge each group? Show your work.

Ages 21 and under:

Ages 22 and up:

e. Is ASU better off charging one price for all fans or charging different prices to different age groups? Support your answer.

Answer 1

A).Part (a) is demand schedule as shown here .

D.) Average price for Age 21 and under is

100+80+60+40+20 =300/5 ( No. Of terms )

= 60

Average quantity = 4000+4500+6500+7500+8500 =31000/5

=6200

For age 22 and above ,

20+40+60+80+100+120+150= 570/7 ( No. Of items )

= 81.4

Average quantity = 75000+60000+45000+35000+25000+20000+15000= 275000/7

=39285.5

B.) If ASU set one price for all it will be

Average price will be 81+60 /2 ( 2 age groups )

Price = 70 approx.

Quantity of tickets sold will be 39290+6200 /2

= 23243 approx.

E.) ASU should charge different price from different age groups as it will help company to earn a good profit and fill up seats easily .

Selling tickets at same price would lead to consumer surplus and producer would stay at a steady state or either sometimes can face loss due to not filling up of seats .

Selling tickets with different prices will help company grow quickly .

Different age groups must be charged differently .

C).This area shown would be consumer surplus as for those agr group who are paying more than $70 as price for ticket now have to pay only $ 70 and that would be part of surplus for them .